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Avoiding Debt with Sensible Habits

Keeping yourself away from getting into a debt is probably one of the most daunting tasks there is, especially if you are the type of person who tend to spend money on big things you may not need.

Debts are usually the outcome of one’s unwise spending habits. Unless your debt is for a positive purpose, such as making investments that will allow you to earn extra income or obtain more assets in the future, then foregoing impulsive and unnecessary purchases just to avoid debt is highly recommended. Thankfully, my best friend happens to be an accountant. Her sensible habits have brushed over me and that helped me stay off the debt grid.

Now if my advice came in too late and you have already put yourself deep into your debt problems, you need to get help. To be able to manage your debts efficiently, seek the advice of a person who has the right skills in enlightening you on your options for paying off your debt as well as educating you on the rules and laws that apply on debt payment and collection. Here are the things that my accountant friend taught me regarding debt issues as well as the ways to turn around your old spending habits:

Know how to deal with debt collection agency. Usually, if you owe a certain amount of money from the bank or other financing company, these establishments may hire debt collectors, who will be assigned to collect payments from you on the agreed payment schedule. Educating yourself on the content of Fair Debt Collection Practices Act will help you deal with debt collection concerns accordingly.

Avoid debt by using cash payments. Purchasing both unnecessary and necessary stuff is the main reason why you may get into debt. In a quick sweep of your credit card and in a few strokes of your pen, money and nice things will be yours, only to give you headaches once the bill comes in. You just need to remember that if you have the cash to pay for the things you need to buy, then you are most definitely spared from incurring debt considering that you literally become hands-on when it comes to your expenses. However, in cases when you need to pay for things like a real estate or a house, make sure that when getting a loan, sign up only for terms that you can afford to pay for.

Use debt wisely. There is no absolute way to avoid debt. At some point, you may need to loan or use your credit card when purchasing something. But you have to understand what you are doing. Evaluate whether the value of the item or goods you are buying is worth the money. Also, ask yourself whether it is in your capacity to repay new charges from the next month’s earnings.

Cut-off your wants and prioritize needs. Determine which purchases you make are categorized as needs and wants. To spare you from spending too much, learn how to reject urges of impulsive buying especially if it’s not essential and is beyond your financial limit. Make a list of things that you plan to buy in the future. Get a head start saving money for it. More importantly, think before you buy. That will save you from the headaches of dealing with future payments.